Title: CEO compensation and shareholder value creation: impact on corporate governance in India

Authors: I. Sridhar; Sahil Singh Jasrotia

Addresses: Indian Institute of Management, Indore, India ' Jaipuria Institute of Management, Indore, India

Abstract: The issue of CEO compensation has been a sticky point both in the developed market and emerging market economies. The purpose of this paper is to provide empirical evidence about the linkages between CEO compensation and shareholder value creation thus enabling good corporate governance environment. Our study provides an interesting natural experiment to test the ageless question of whether a socialistic approach to executive compensations affects economic efficiency. Our finding is a clear departure from the CEO compensation experiences in the developed countries where large scale excesses and mismatches were reported. The study finds that good corporate governance stands established, if the CEO pay is linked to shareholder value creation.

Keywords: corporate governance; CEO; executive compensation; shareholder value creation; India.

DOI: 10.1504/IJBIR.2021.119814

International Journal of Business Innovation and Research, 2021 Vol.26 No.4, pp.504 - 516

Received: 06 Jul 2019
Accepted: 09 Jan 2020
Published online: 21 Dec 2021 *

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